Should You Shop For Tiffany Stock Ahead of Earnings?

TIF has held below its year-to-date breakeven level

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Luxury jewelry retailer Tiffany & Co. (NYSE:TIF) steps into the earnings confessional tomorrow, Nov. 24 before the market opens. TIF has performed better than most would have expected during the coronavirus pandemic; despite a significant drop in revenues and net profits, the company has managed to remain profitable throughout the year, with the exception of the second quarter. Plus, Tiffany & Co. maintained its dividend for the whole year. Below, we'll dig into TIF's post-earnings history, as well as its technical setup.

So far this year, TIF has languished below its year-to-date breakeven point. Yet at the same time, shares are only a chip shot from their Feb. 14 52-week high of $134.42. The stock's chart setup is fascinating; note below the sharp gaps into $108 in March, June, and September. And more recently, TIF has consolidated below the $132 level.

Daily Stock Chart TIF

Earnings reports on TIF stock have beat expectations on two of its four most recent quarterly announcements. In the company's fiscal fourth quarter of 2019, Tiffany & Co. beat expectations by $0.20. In the fiscal first quarter of 2020, the company beat expectations by a margin of $0.03. The company subsequently missed expectations by $0.56. Most recently, Tiffany & Co. beat its earnings target by 68.4% for the third fiscal quarter of 2020! Earnings for Tiffany are due out tomorrow, November 24 and its expected that their EPS will increase to $0.66.

TIF stock has a forward dividend of $2.32 and a dividend yield of 1.77%. The company has announced a dividend of $0.58 for the fourth quarter of 2020. Tiffany & Co. has paid dividends regularly since 1988.

Using Schaeffer's historical database, we conduct proprietary research on each underlying equity and determined which of those underlying equities’ options have historically had underpriced or overpriced options. We rank each equity’s options relative to the others in our database, with scores ranging from zero to 100. TIF currently sports a ranking of 19 out of 100 on the Schaeffer's Volatility Scorecard (SVS). Low SVS readings like this one point to the stock having consistently realized lower volatility than their options have priced in -- pointing to possible premium-selling candidates. 

Despite the company's outperformance of expectations throughout the coronavirus pandemic, TIF currently trades at a high price-earnings ratio of 64.65. TIF forward price-earnings ratio is also 29.24, which means the stock has already priced in a full recovery for the company in 2021. At its current price, investors likely will not to see significant gains until 2023 or beyond through investing in the equity. Furthermore, in the bigger picture, Tiffany & Co. has produced lackluster revenue results over the past few years. Tiffany & Co. only reported about a 10% increase in overall revenue between 2016 and 2020, and the company's net income was largely inconsistent. Overall, the company’s future growth is uncertain despite the stock price being on the higher end.

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